DENVER, Colo. — A Colorado company that once shared its secrets with Chinese miners is launching a $511 million bid to break the chokehold China subsequently gained on rare-earth metals — crucial elements of smartphones, smart bombs and the clean-energy economy.

Greenwood Village-based Molycorp Minerals aims to return rare-earth mining to the United States, making the metals more affordable and creating jobs in Colorado and around the West.

But the environmental ravages of mining rare-earth metals that factored into moving the mining to China present a major challenge of meeting U.S. standards today.

China now supplies 97 percent of rare earths — 17 metals including neodymium, samarium and dysprosium — which, while obscure, are as ubiquitous in modern life as cell phones. Congressmen and military analysts have raised concerns about the heavy dependence on Chinese supplies because the country recently shut off shipments with no official explanation.

Along Colorado's Front Range, wind-turbine maker Vestas, which employs 1,200 at three factories, and electric-motor maker UQM Technologies are among the firms that import rare earths from China.

"We're going to put this country in a much better position," Molycorp chief executive Mark Smith said of the venture to mine the metals domestically.

When Molycorp ramps up mining of rare earths, "there will be diversity of supply so that America can have a choice as to where they buy those minerals," Smith said.

Environmental challenges? No problem, he said. Technological breakthroughs enable a cleaner process.

And, he said, Molycorp will process the metals at about half the cost — $1.27 per pound versus $2.54 in China.

At open-pit mines in China, miners extract rare-earth metals by pouring acids over ore — creating huge toxic sludge ponds.

China for years has pursued a strategy of limiting exports, while offering steady low-cost supplies of metals to manufacturers that agree to move jobs to China.

Chinese producers in China's state-run economy "are going to take care of themselves first, right?" Smith said in an interview at his Denver Tech Center headquarters.

Chinese authorities couldn't be reached. China's embassy spokesman, Wang Baodong, in Washington, D.C., didn't respond.

China's carrot-and-stick policy is unfair, an obstruction of market forces, said U.S. Rep. Mike Coffman, R-Colo. He is preparing legislation that would require U.S. officials to pursue economic sanctions against China at the World Trade Organization.

The recent suspension of shipments ought to persuade U.S. military leaders — who need the metals for bombs, night-vision goggles and tanks — that "China will use their rare-earth metals as leverage for other things," Coffman said.

"We shouldn't just lean back and let it happen," he said. "I don't think we can trust China."

U.S. companies now pay a premium to import essential supplies and don't dare complain, Coffman said. "People are intimidated — to include the (Obama) administration."

A recent Defense Department internal report asserted that the military can rely on Chinese suppliers.

Meanwhile, the Energy Department has offered Molycorp $280 million in loan guarantees that helped raise $380 million for the U.S. mining venture. Lawmakers also are considering legislation to boost research and development. The Colorado School of Mines, which recently announced a new course in rare-earth metals, is poised to benefit.

Molycorp would mine in the Western desert, refurbishing its Mountain Pass Mine 60 miles south of Las Vegas — a facility that was closed in 2002 after spills and a costly cleanup and conflict with regulators.

Revamped operations will include a new mill and manufacturing of magnets using the metals.

While still using hydrochloric acid to remove metals and radioactive thorium from ore, the process will recycle wastewater so that settling ponds aren't needed.

Dry tailings later would be spread around Molycorp's 2,222-acre site on the California-Nevada border, molded into hillsides and covered with native vegetation, communications director Jim Sims said.

A five-year sales contract for lanthanum used in refining petroleum, signed Thursday with W.R. Grace, could bring significant income.

Back in the 1980s, Molycorp hosted Chinese delegations and shared know-how. Now such exchanges have ceased and new technologies are protected by patents.

Any future cooperation, Sims said, must ensure respect for intellectual property. "We're going to be very careful about guarding these new technologies and keep them in the United States."

If all goes as planned, the mine would reopen by the end of 2012 to produce 20,000 tons a year.

Global demand for rare earths requires about 125,000 tons a year, 50,000 of which is used outside China. China's government allows exports of only 30,000 tons. The recent suspension forced up prices by 700 percent.

"We've seen a price increase," said Bill Rankin, chief executive of Longmont-based UQM Technologies, where 300 workers soon could be hired to make electric motors using rare-earth magnets for vehicles — which are to be assembled in China.

"We're extremely pleased about Molycorp's reopening of the Mountain Pass Mine," Rankin said. "If they offer rare earths at a competitive price, we'll certainly buy it from them.

"Getting rare earths from one particular country is probably not a good thing."

The cumbersome U.S. environmental regulatory processes "result in costs and lead time that certainly aren't helping the issue," Rankin added.

Colorado Mining Association president Stuart Sanderson planned to help press the case for speedier approvals.

"We're becoming increasingly import dependent, not only for rare-earth minerals but a variety of minerals, uranium one of them," Sanderson said. "It's important that we try, to the extent possible, to secure sources of minerals here. That means responsible domestic mining."

Inside UQM's factory, workers saw no other option than to figure out how to mine metals more efficiently and cleanly at home.

"If we don't start going down that road, we'll be completely at the mercy of China," said business-unit manager Luke Bokas, 31, a refugee from Michigan's auto-industry meltdown.

Otherwise even existing jobs may be at risk.

"It wouldn't be the first time my job's gone to China," said Roxanne Salazer, 36, a warehouse receiving clerk.

She'd been laid off from a factory where she made electronic circuit boards — closer to her home in Fort Collins. Now she handles boxes of the rare-earth magnets — imported from China — that UQM needs to make motors.

"It's terrible to lose your job," she said.